NYC’s Airbnb crackdown has fueled an underground market for home stocks

A years-long crackdown on Airbnb in New York City has created an exploding underground market for apartment rentals — and a handful of scrappy startups are attracting big-name investors as they try to grab listings that comply with the city’s new rules. Trying to.

last fall, New York City Council enacts Local Law 18 – strict rules on home-sharing Airbnb forced to remove most of thousands of Big Apple rentals on its site at that time.

Now, hosts face tougher registrations new rules This also includes the strange requirement that guests be home when they are present – ​​unless the rental period exceeds 30 days.

In response, a raft of private, invite-only groups with names like “FriendBnB” and “Gypsy Housing NYC” have sprung up across Facebook, Instagram, WhatsApp, and Craigslist. Typically, they charge through apps like Venmo or PayPal.

One called “NYC Short Term Sublets” says it is “focused on the midway for those looking for a short to medium-term stay,” with clients coming “for work, theater performances, film festivals or Come to New York for an extended period of time.” Just normal tourism.”

The group has gained 17,300 members on Facebook since April 2023 and added 630 postings in the last month alone.

Meanwhile, in June, a New York-based startup called Ohana Rented a 2,000-square-foot loft space in the newly renovated Domino Sugar Factory in Brooklyn.

There, about 20 employees can be found daily hunched over their Macs, rotating through about 40 of these social media groups, which, according to a recent tally, account for about 60,000 listings.

Ohana, which focuses on rentals longer than 30 days, isn’t shy about trying to lure any group of landlords and renters alike to its app. On a regular basis, sparks can fly.

“Hey guys – sorry, but this group has been infiltrated by some useless startup started by these chads who are paying people to post listings in the group,” a WhatsApp called “NYC Home Sharing” wrote group founder Ricky Berrin.

He added, “Please report anyone posting listings on a site called Ohana.”

Elsewhere, Craigslist sent Ohana a cease-and-desist letter recruiting potential hosts away from the classified site. But according to CEO Ezra Gershanok, Ohana investors see it as a sign of respect.

“It’s common for companies like mine to get leads like this,” Gershanok told The Post. “Airbnb[targeted Craigslist listings]was in the early days and investors love to look at it because it’s proven to be a successful strategy.”

In June, Ohana raised $3 million from several former Airbnb executives and Spencer Rasoff, co-founder of real estate marketplace Zillow. This was in addition to the $1.2 million it received from startup accelerator Neo last year.

Cash arranged to recruit more than a half-dozen students and recent graduates who spoke Mandarin, Hindi and Hebrew to woo landlords and tenants alike, including foreign exchange students.

Gershanok said Ohana has recruited more than 1,200 hosts from Airbnb alone since it was founded 18 months ago and is acquiring 500 hosts a month from social media and the Web. It has paid out more than $2 million in rental payments.

Gershanok, 25, worked briefly at McKinsey & Company and founded Ohana with his childhood friend, 25-year-old Jacob Halbert, a former Apple engineer.

Their increasingly sophisticated operations are troubling groups like NYC Home Sharing, which owner Berrin calls “an informal solution to the problem that has arisen since these new restrictions were implemented.”

Berin said the temporary group was formed in 2021, but demand has skyrocketed since Local Law 18 went into effect. WhatsApp limits private groups like its own to 1,024 members. Berin said NYC home sharing is maxed out, with a waiting list of more than 1,000. Recently they have increased their fees by $5 to $25 per month.

“The group was not created as a way to avoid the law,” Berrin said in a follow-up email to The Post. “And I think most of the posts are actually rentals of a month or more.” , which includes the lease.” Acquisitions and annual leases.

“People posting on the platform must follow any local laws,” he said. As for Ohana, Berrin said he kicked them out because “they were clearly violating the spirit of the group and I had several people complain about them spamming their accounts.”

hostyouLaunched in April 2023 by Northwestern University student Bella Le Sage, it is trying to capitalize on the turmoil with a site that focuses specifically on connecting students with housing.

The Chicago startup has expanded into New York City with the help of an undisclosed investment from Edwin Marcial, the former chief technology officer of Intercontinental Exchange (ICE), who now runs a tech-focused fund called Thirteen Castles.

“We view Local Law 18 and other regulations as positive for our business,” Le Sage told The Post. He said HostU is in the process of closing its second fundraising round.

Meanwhile, based in Austin, Texas equipped finderFounded in 2014, it is now a major player in the 30-day plus market in New York.

Last year, it acquired former VRBO president Jeff Hurst when private equity firm Summit Partners took a majority stake in the company.

Hurst also confirmed that Furnished Finder’s business has increased in New York City since Local Law 18 was enacted.

“Our growth in demand and supply of renters has doubled, and I’m sure there are hosts who used to only be on Airbnb,” Hurst said.